Coote Industrial, Greentrains in $8m equity deal

MADDINGTON-BASED Coote Industrial and associated company Greentrains have negotiated related fund raising deals worth $8 million with Victorian Caterpillar dealer Dale Elphinstone.

The deal is part of efforts by Greentrains to refinance its $75 million debt, which was largely incurred when it purchased railway rolling stock from Coote subsidiary Gemco.

Coote managing director Mike Coote told WA Business News Greentrains needed to raise $15 million in equity, which was a pre-condition for refinancing its debt.

So far Greentrains has locked in $11.5 million, with $6.5 million from this week's placement of shares to Mr Elphinstone's company Elph Pty Ltd and $5 million in covertible notes subscribed by Orange Grove Brickworks, a company owned by Mr Coote's parents.

"They need the equity to refinance the debt,'' Mr Coote said.

"That will allow the debt to flow.''

Greentrains' refinancing strategy includes working towards an ASX listing.

Repayment of the Greentrains debt is a key strategy for Coote, as it currently precludes progress on a number of other growth objectives.

Elph will pay $1 each for the 6.5 million Greentrains shares and will also subscribe to 6.5 million Coote shares at 20 cents each, for a total cost of $1.3 million. Mr Coote said it would use the funds for working capital.

Elph is a member of the Elphinstone Group of companies, which is controlled by Dale Elphinstone.

The group operates the Caterpillar dealerships in Victoria and Tasmania, while Mr Elphinstone sits on the board of National Hire Group along with John Langoulant, Richard Court and Peter Gammell.

Last month, Elphinstone Group become a substantial shareholder in Coote after acquiring 5.32 per cent of shares.

Coote said in a statement that the fresh equity for Greentrains was part of that company's larger debt and equity fundraising activities.

Last year, Greentrains purchased 42 locomotives and 54 wagons from Gemco for a total of $82.7 million, a debt that Greentrains has since reduced by around $7 million.

All of the locomotives and wagons are now being used by various rail operators including Coote subsidiary, South Spur Rail Services.